My kids will be 3 (boy) and 1 (girl) this year and we are doing a Play-Doh party! The 1-year-olds won't really care or be interested in participating anyway, so they can just play in the sand box and in the yard while the "big" kids keep busy with Play-Doh.
I've been scouring the internet for ideas and think that I'm going to set up a long table and have different Play-Doh stations at each seat. Each kid will get to play with each station for 15 minutes and then we'll rotate. Should keep them pretty busy!
The party isn't until the beginning of June, so between now and then, I'm keeping my eyes out for sales and on Craigslist for Play-Doh Fun Factories and picking up Play-Doh when I see it cheap. Bonus: We'll be keeping the Fun Factories as the oldest's birthday presents.
Decorations will be simple: Cheap yellow table cloths (to match the Play-Doh containers), different colored napkins/plates (to match the Play-Doh lids) and different colored balloons. All very cheap!
I'm going to do cupcakes with yellow wrappers and different colored icing on each one, so they look like containers of Play-Doh. How cute is that? :)